DOW JONES NEWSWIRES Chipotle Mexican Grill Inc.'s (CMG) second-quarter earnings grew 9% as the fast-casual burrito chain reported higher store traffic and benefited from new store openings, although food costs also increased. Shares decreased 3.5% to $322 in after-hours trading, as the profit growth wasn't as strong as analysts expected. Still, the stock was up 57% this year through Tuesday's close. Restaurant companies have been under pressure from higher commodity costs, and many in the sector have responded by raising prices. Chipotle had generally refrained from price increases to keep its traffic levels elevated, but last month said it would be raising menu prices in the northeast and southeast for the first time in years, with changes in other markets to follow. In the latest quarter, restaurant level operating margins narrowed to 25.8% from 26.9% due to higher fuel costs. Same-restaurant sales, meanwhile, grew 10%. Earlier Tuesday, investment firm Janney Capital Markets raised its same-restaurant sales forecast by two percentage points, to 10.5%. Janney touted the chain's higher-quality ingredients and speedy service, saying those positives would lead to additional market share gains. For the latest quarter, Chipotle reported a profit of $50.7 million, or $1.59 a share, up from $46.5 million, or $1.46 a share, a year earlier. Revenue jumped 22% to $571.6 million. Analysts surveyed by Thomson Reuters expected a profit of $1.68 on revenue of $561 million. The company also raised its same-restaurant sales outlook for the year, now seeing high-single to low-double digit growth. Previously, Chipotle had projected a mid-single digit increase. -By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com
